Tata Motors anticipates car prices in India will remain “competitive” in the new year, driven by new model launches and despite a rationalization of inventory levels across the industry. This comes in the context of a cooling off in demand following two years of strong growth.
“The crux of the discounts came in earlier this year, when the market’s inventory levels became unsustainably high,” a company official explained. “Therefore, you had no choice but to incentivize retailers and take it out.” This situation has since changed, with inventories now under control. “Right now, inventory is corrected sharply across the industry, and for Tata Motors, it is also significantly brought down in less than 30 days with respect to retail inventory.” said CFO PB Balaji today.
While acknowledging a moderation in demand growth, the company emphasized the context of this slowdown. “The growth is not as buoyant as it was, but we shouldn’t forget that we are coming off two blockbuster years in terms of volume,” the official stated.
Looking ahead, Tata Motors expects a continued competitive environment in the Indian auto market, fueled by ongoing product launches and innovation. “But given the innovations and intensity of launches we have seen, we should continue to expect a competitive market in India,” the official said.
This competitive landscape, combined with lower inventory levels, is expected to keep pricing in check. “At the same time, we believe lower inventory levels should help offset any pressures people have in just pumping inventory,” the official added.
In essence, while the explosive growth of the past two years may have tempered, Tata Motors believes that a combination of new models and controlled inventory will ensure that car buyers in India continue to benefit from competitive pricing.
The Indian car market in late 2024 presented a stark contrast to the previous years. Gone were the days of long waiting lists and eager buyers snapping up new models as quickly as they arrived. Instead, dealerships found themselves with overflowing lots, and manufacturers were faced with the reality of slowing demand. This shift in the market dynamics led to a flurry of discounts and incentives aimed at enticing hesitant customers.
The reasons behind this slowdown were multifaceted. Rising interest rates made car loans more expensive, while inflationary pressures squeezed household budgets, leaving less disposable income for big-ticket purchases like cars. Economic uncertainty further dampened consumer sentiment, leading many to postpone major spending decisions.
Car manufacturers offered direct price reductions, while exchange bonuses incentivised customers to trade in their old vehicles for new ones. Loyalty programs rewarded repeat buyers, and attractive financing schemes offered lower interest rates or extended loan terms. These offers aimed to clear out unsold inventory, maintain sales momentum, and keep production lines humming.